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Board directors face salary cuts after Nevada AG says they can’t be paid more than governor

Just before the 2018 holiday season, directors of five Nevada licensing board got some less-than-merry tidings from the state attorney general: Their salaries are impermissibly high under the state’s laws because they are being paid more than 95% of the governor’s salary, currently $141,867 per year.

The AG opinion was requested by Governor Brian Sandoval after an audit showed the apparent violations in June 2018.  Based on the opinion, the directors of boards regulating accountants, physicians, contractors, speech therapists, and registered environmental health specialists will get a pay cut. The pharmacy board director, who is paid $181,677 per year, had the highest salary of that group.

The AG rejected arguments by some of the directors that fee-funded boards and commissions’ employees do not have to comply with the statutory limitation because the boards are autonomous, the employees do not participate in the state pension fund and they have neither “classified” or “unclassified” designations under the state personnel system.

Under NRS 281.123(1), “The salary of a person employed by the State or any agency of the State must not exceed 95 percent of the salary for the office of Governor during the same period,” the attorney general noted.

As a legislatively created “regulatory body” with “the authority to regulate an occupation or profession” within its purview, a fee-funded board or commission derives its authority from, and owes its existence to, the State of Nevada. . . Accordingly, the regulatory activities of fee-funded boards and commissions are inextricably tied to State government both financially and administratively.”

The statute applies in general terms to any person who is “employed” by the State or an agency of the State, the opinion said. “And since the meaning of ‘employed’ is well-settled and commonly understood, its dictionary definition supplies the appropriate standard for interpreting the salary limitation.” To employ is ‘to give work (to someone) and pay them for it,’” the opinion continued, citing the New Oxford American Dictionary.

As a past participle, the opinion continued, the word ‘employed’ refers to “the state or fact of being employed for wages or salary.” “Accordingly, a person is employed by the State if that person performs works and provides labor in exchange for a salary or wages paid by the State.”

On the question of the board’s autonomy as a fee-funded agency and whether it broadens the board’s authority to set salaries, the attorney general cited several factors in concluding the answer was no:

  • Fee-funded boards and commissions receive no distributions from the State General Fund, but they are subject to financial and administrative oversight by both the legislative and executive departments of the State.
  • The persons who staff fee-funded boards and commissions are entitled to be defended and indemnified by the State according to the same terms as all other employees of the State.
  • The board must adhere to the Nevada Administrative Procedure Act, which is applicable to “all agencies of the Executive Department of the State Government.”
  • No statutory wording suggests legislative intent to grant boards’ unfettered discretion to set their employees’ salaries.

About nine years ago, the governor issued a memorandum directing that board salaries be equivalent to similar positions within the state system. but almost two-thirds of boards reported they didn’t follow that directive, state auditors said in 2018.